Merchants Bank, The

Burlington, VT · Cert 6268

FDIC · 32 branches

Q1 2017

Board Package

Performance Trends and Peer Comparison

Part 1Performance Trends, own institution only2

Part 2Peer Comparison, not published for this institution and quartern/a

Basis

Quarter: Q1 2017, the quarter ended March 31, 2017, on both parts.

Income statement: year to date as filed, annualized, on both parts.

Balance sheet: as filed at quarter end.

No peer standings are published for this institution and quarter.

Peer groups below the disclosure floor are suppressed.

Burlington, VT · Cert 6268

FDIC · 32 branches

Q1 2017

$2.0BAssets

$1.5BLoans

$1.5BDeposits

$175.0MEquity

Loan mix

Deposit mix

Market Position · Burlington-South Burlington, VT · 2016 SOD (annual) · 14.8% share · #3 of 12 inst. · $0.7B of $4.9B

14.9% Chittenden

11.5% Rutland

6.9% Washington

1.0% Hampden

Earnings: ROA of 0.80%, up 4 bps year over year; NIM at 2.83%.
Asset quality: problem loans at 0.27% of loans (+27 bps YoY), with net charge-offs at 0.01%.
Capital: tier 1 leverage ratio of 8.41%, down 1 bps from a year ago.
Funding: loans stand at 101.92% of deposits as of Q1 2017.

Return on Assets (YTD, annualized)

0.80%+4 bps YoY

Net Interest Margin (YTD, annualized)

2.83%-1 bps YoY

Efficiency Ratio (YTD, annualized)

65.55%-315 bps YoY

Tier 1 Leverage Ratio

8.41%-1 bps YoY

Year to date, annualized, through each quarter.

Metric	Q2 2015	Q3 2015	Q4 2015	Q1 2016	Q2 2016	Q3 2016	Q4 2016	Q1 2017	YoY Δ	Trend
Earnings
Return on Assets	0.83%	0.87%	0.80%	0.77%	0.87%	0.88%	0.87%	0.80%	+4 bps
Return on Equity	9.66%	10.22%	9.48%	9.06%	10.07%	10.06%	10.05%	9.43%	+37 bps
Net Interest Margin	2.76%	2.75%	2.60%	2.84%	2.89%	2.88%	2.82%	2.83%	-1 bps
Efficiency Ratio	68.94%	68.11%	69.35%	68.70%	64.36%	64.50%	64.27%	65.55%	-315 bps
Non-Interest Burden	1.68%	1.62%	1.60%	1.77%	1.64%	1.64%	1.59%	1.65%	-12 bps
Growth
Asset Growth (YoY)	4.15%	10.32%	17.19%	15.76%	13.22%	9.71%	2.31%	3.25%	-1,251 bps
Loan Growth (YoY)	6.85%	8.76%	19.62%	18.45%	15.93%	17.44%	7.07%	8.52%	-993 bps
Deposit Growth (YoY)	2.69%	6.33%	18.48%	14.78%	7.91%	8.41%	-1.40%	-0.88%	-1,566 bps
Asset Quality
Nonperforming Loans / Loans	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.27%	+27 bps
Net Charge-Offs / Loans	0.00%	0.01%	0.01%	0.02%	0.01%	0.03%	0.03%	0.01%	-1 bps
Allowance / Loans	1.01%	0.97%	0.85%	0.86%	0.89%	0.85%	0.84%	0.85%	0 bps
Allowance Coverage of NPLs	n/a	n/a	n/a	n/a	n/a	n/a	n/a	3.1x	n/a	n/a
Capital
Tier 1 Leverage Ratio	8.74%	8.72%	8.68%	8.41%	8.65%	8.69%	8.53%	8.41%	-1 bps
Total Risk-Based Capital	16.40%	16.65%	15.57%	15.62%	15.66%	15.30%	14.82%	14.73%	-89 bps
Equity / Assets	8.79%	8.29%	8.23%	8.68%	9.16%	8.79%	8.37%	8.62%	-6 bps
Liquidity & Funding
Loans / Deposits	89.36%	90.66%	91.15%	93.10%	96.00%	98.21%	98.97%	101.92%	+883 bps
Liquid Assets / Assets	8.44%	11.65%	11.01%	7.74%	7.35%	6.85%	6.88%	5.48%	-226 bps
CRE / Total Capital	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a